The U.S. economy added just 22,000 jobs in August, falling far short of expectations and signaling further signs of a cooling labor market. The report, released by the Labor Department’s Bureau of Labor Statistics (BLS), highlighted a sharp slowdown from July’s revised gain of 79,000 jobs. Economists had projected an increase of around 75,000 positions.
Job growth in health care was offset by declines in government employment, reflecting the White House’s effort to reduce the federal workforce. Additional losses were recorded in mining, quarrying, and oil and gas extraction.
The unemployment rate ticked up to 4.3% from 4.2% in July, in line with forecasts. Wage growth also slowed, with average hourly earnings rising by 3.7% year-on-year, matching market expectations.
Markets now anticipate that the Federal Reserve will move forward with a 25-basis point interest rate cut at its September 16–17 policy meeting. The CME FedWatch Tool currently shows investors pricing in nearly a 100% chance of such a move. Policymakers have increasingly emphasized supporting the labor market, even as inflation risks remain.
Capital Economics’ North America economist Bradley Saunders noted that the weak jobs gain all but guarantees a Fed rate cut, though the slight uptick in unemployment will likely prevent a larger 50-basis point reduction.
The August report also followed downward revisions to prior months. June’s numbers were adjusted from a modest gain to a loss of 13,000 jobs, while July’s tally was revised upward by 6,000. Together, these changes meant total employment for June and July was 21,000 lower than previously estimated.
President Donald Trump, who criticized July’s weak report and accused the BLS of bias, has since replaced the bureau’s commissioner with a political ally.
Following the release, S&P and Nasdaq futures edged higher, while the dollar index weakened. U.S. Treasury yields also moved lower as traders factored in the likelihood of upcoming rate cuts.
